Not a Very Wise Move

Diaz v. Professional Cmty. Mgmt., Inc., No G053909 (D4d3 Nov. 8, 2017) 

This, my friends, is some sketchy, sketchy, stuff.

It’s an employment case. Employer’s SJ gets denied two weeks before the trial date. The next day, employer files a (very, very, late) motion to compel arbitration, but the hearing date on the motion is not till after the trial. So Employer also files an ex parte application to advance the hearing date, which Employee opposes because it’s clearly a delaying tactic. Indeed, as Employee points out, the whole thing is a feeble an attempt to manufacture an appealable order—orders denying motions to compel arb are subject to immediate appeal, see Code Civ. Proc. § 1294—which will potentially delay trail for years. 

The trial court didn’t buy the delay play and denied the ex parte. Its minute order said only that the ex parte to advance was denied; the court did not deny the arbitration motion in substance. But then employer’s counsel submitted a (deceptively titled) proposed order that actually denied the motion on the merits. After its lawyer’s secretary badgered the clerk a bit, the court eventually singed the proposed order without amendment, and Employer filed a notice of appeal the day before trial was to start.

The Court of Appeal is, to say the least, not pleased. It quickly dispenses of the merits. On one hand, the trial court’s minute order shows that it clearly intended to deny just the ex parte shortening time, so by submitting a proposed order that tricked the court into denying the motion to compel on the merits, Employer invited any error that occurred. If, on the other hand, the trial court actually intended to deny the petition on the merits, it did so at the insistence and consent of Employer, who, following an order denying only the ex parte, submitted a proposed order broadening the scope. If that’s the case, Employer isn’t aggrieved enough to appeal.

And then to go belt, and suspenders, and yet another belt, the court further finds that Employer waived any right to compel arbitration by failing to raise arbitration until the eve of trial. In doing so, it dispenses (with some vigor) Employer’s semi-inscrutable argument that Employee somehow waiver the right to argue waiver, even though that argument was addressed in the opposition to the ex parte.

Were that not enough, the court releases the Kraken of appellate fact-finding. Section 909 of the Code of Civil Procedure permits an appellate court to make factual findings and even take new evidence, so long as it doesn’t upset a party’s right to jury trial in the trial court. It is one of those weird things about California Civil Procedure that just hangs out there, quietly, until someone notices it. Although the text of the statute nods at a liberal construction, the California Supreme Court has said it should only be invoked in “exceptional circumstances.” In re Zeth S., 31 Cal. 4th 396, 405 (2003).

From what I can tell, § 909 is mostly applied in family law and juvenile cases where jurisdiction is ongoing and the factual circumstances after judgment is entered are fluid. It affords a safety valve to avoid ping ponging between the trial and appellate courts where the situation isn’t static. Suffice it to say, those aren’t the facts of an ordinary civil case like the one here.

But that ain’t gonna stop the justice train. The court invokes its power under § 909 to expressly find that Employer acted in bad faith in moving to compel when it did. Employer asserts that § 909 can’t apply to plaintiff’s substantive claims, which carry a jury trial right. But even though Employee concedes the argument, the court does its own research and finds that § 909 nonetheless can apply to the issue on appeal—the motion to compel arbitration—because that issue is for the court to decide. So even were the trial record insufficient to find a waiver of the right to arbitrate, the bad faith finding puts it over the top.

And then based on all this, there’s sanctions. Given that Employer manufactured an appeal of its own motion motion that it schemed to have denied on the merits, the appeal is frivolous, meriting sanctions under § 907. The court orders Employer’s counsel to pay $8,500 in sanctions to the court, plus Employee’s fees and costs on appeal and whatever Employee expended and lost on trial prep. Counsel also get the honor of being ordered to send the opinion to the state bar.

Affirmed.